Jeff Degraff's Blog, page 8

Is the finite diploma obsolete in our fast-changing world?

Recently, I read a story in the LA Times entitled, “’A sea of despair’: White Americans without college degrees are dying younger.” It was about a Princeton study on mortality rates. Apparently, all ethnic groups are living longer with the exception of white Americans. The researchers suggest that decades of underemployment have had a damaging effect on the group’s financial and personal decisions, making them an easy target for profiteers and ideologues. The message: You need a college education if you don’t want to die young.

A few weeks earlier, in the Economist, I read this – “Lifelong learning: How to survive in the age of automation.” The article is filled with stats on how a college education no longer a means a good job. It suggests that massive open online courses – those free online lectures – may replace universities in the near future, and even intimates that technology itself is taking the best jobs. The message here: a college education is of limited value given the rapid pace of technology.

A sure sign there’s a major pivot in a company or a market or a culture is the presence of a distinct incongruity like this one. So, which is it? Do we skip college and die young, or do we go to college and waste our time and money?  The correct answer is neither.

The original purpose of a college education was to cultivate a quality of mind, to impart in the student a wider worldview. However, a college degree has also been a hallmark of class distinction and privilege. Though big steps were taken after the Second World War to democratize educational opportunities, a diploma still represents the great divide between the haves and have-nots in our country. This is even more apparent now that the exorbitant cost has put a college degree out of reach for so many.

Universities still exist because knowledge directly translates into skills deemed worthy by society. But those skills constantly change with new discoveries, technologies and even language. Miss the shift and you’re left behind. The ability to make informed decisions, manage resources, communicate ideas and coordinate communities is essential in our global marketplace. But keeping up with the Joneses requires constantly keeping up with the latest findings.

Colleges and universities are finally getting the message. Professional schools are adding compulsory life-long education to their curriculum so skills are kept current. In fact, at the University of Michigan’s Ross School of Business, where I teach, graduates now have lifetime, tuition-free access to leadership development and executive education.

So why not take the next step? There are many on-demand providers that currently deliver college curriculum. Granted, some are degree mills of little value. But a real innovation would be if a college diploma was treated as a work in progress, an ongoing accumulation of certifications. Think of it like earning Boy Scout badges: a financial management badge, a data analysis badge, and a product development badge. Three badges and you’re a Tenderfoot. 30 and you’re an Eagle Scout. Or if you prefer, a Brownie or a Cadet. You get the picture. Ideally, our education would resemble our careers, where we build our credentials over a lifetime of work.

The needs of a disenfranchised social class and the availability of lifelong learning could be a powerful combination, with the potential to help re-establish our missing middle class.

It may not help us live longer, but it might just help us live better.

This article was originally published on The Next Idea

The internet is a lot less democratic than you think

During the recent Academy Awards broadcast, Samsung aired a commercial for its new phone. Casey Neistat, a YouTube and HBO reality personality, narrates over a montage of young people engaged in feats of derring-do and uninhibited expressions of creativity. He declares that we are the true makers and maestros, and finishes with this zinger: “When we are told that we can’t, we all have the same answer – watch me!” And, there it is. The glorification of our selfie culture.

Apparently, all you need to get people to watch you is a non-exploding phone, astonishing talent, bushels of cash and an insane amount of luck. Then you, too, can be adored for ninety seconds, the average time a person spends watching an online video.

Sure, I love the fact that people are creating and sharing those creations. But I don’t believe for a moment that the web is truly as accessible and democratic as many would have us believe.

You see, the web is no longer the free and open space it was a decade ago. It’s now a feudal system run by a handful of ultra-large and ultra-sophisticated monarchs. The rest of us are just serfs handing over a percentage of our crop to the lords and ladies who have the power to grant us access to the digital world of meaningful commerce. Our chances of actually becoming web royalty are about the same as retiring from that scratch-off lottery ticket.

Consider this: Google companies get over 50 billion visits each month. There are only 7.5 billion people on this planet, and only about a third of them have regular internet access. That means that every person with internet access visits Google almost every day. The search engine decides what you will find, because these visits aren’t free. Some company has sponsored your trip on the web and expects the search engine to deliver you to them.

Right now, the net is in a consolidation phase. A few big players are gobbling up niche providers and creating enormous storefronts and networks. Sure, there’s still infinite variety on the web, but good luck finding it. Look at the retail sector, where 55% of all searches for online products start with Amazon, which also accounts for over half of all the retail growth on the web. The numbers for Facebook, Netflix and Wikipedia are similar for their own domains. The same thing happened to television in the 1950s when hundreds of local broadcasters were forced into three networks by the economics of scale.

But surely there’s still room for your little entrepreneurial dream, noble cause or heroic work of art. So you pay your web domain, the development of your site and the fee to your internet service provider to keep things running. Still, that won’t get you much traffic unless you have more friends than Kim Kardashian. You spring for a consultant to concoct a magic algorithm to put you atop the search list, and perhaps you even go for some banner ads hoping they don’t accidently pop up in the middle of some troll’s little hate-fest. You keep this up in perpetuity because it’s the price you have to pay to belong to the digital world.

You now realize that the web has become a glorified phone book. We can’t watch you because we can’t find you. Regrettably, those that are most adept at finding us are commercially or ideologically motivated. Don’t believe me? Well, I’m posting this to a web site where, as you know, everything you read is true.

This article was originally published on The Next Idea

Mark Zuckerberg’s visit offers a glimpse into Michigan’s future

Facebook’s 32-year-old billionaire founder, Mark Zuckerberg, has been touring the country. He made stops in Michigan recently. He toured Ford’s Rouge plant and even tried his hand at putting parts on an F-150 pickup truck. Turns out time on the assembly line is hard work. He also privately met with Muslim students at the University of Michigan-Dearborn.

The Next Idea’s Jeff DeGraff and Detroit News business columnist Daniel Howes joined Stateside to talk about the visit and what Zuckerberg could be planning down the road.

“I think he’s trying to get a line of sight on autonomous vehicles,” DeGraff said. “I think what he’s trying to figure out is where are the metalbenders going?”

In talking to U-M Dearborn students, and later a Donald Trump-voting family in Ohio, DeGraff feels like he’s trying to get a sense of what people are thinking and what people will be using in the future.

Howes, who recently wrote a column about the visit, was intrigued by Zuckerberg’s posts on Facebook following the trip to Michigan.

“[His posts] sounded a little wide-eyed, as if he, for lack of a better term, was visiting the zoo,” Howes said. “He goes into an auto plant and he’s just slack-jawed that people actually work hard. I thought he came off as living in a bit of a bubble. And we here in Detroit know a little bit about living in a bubble, we’ve been accused of it, and rightly so, for many decades.”

Listen to the full interview above to hear what the impact of Zuckerberg’s visit ultimately will be and how a future move into the auto industry by Silicon Valley isn’t necessarily a move for cars, but rather, a move for data.

This article was originally published on The Next Idea

 

Forget net neutrality, regulatory neutrality is what we really need

In the early 1990s, I visited billionaire George Soros’ office in New York City to provide some direction on an investment his firm had made in a technology startup run by senior Israeli Air Force officers. Their technology was something akin to an iPod, and this was almost a decade before you could store your entire music collection on a device the size of a bar of soap.

The officers had the prescient concern that the internet was not designed to be secure and that this vulnerability would eventually lead to cybercrime and espionage. They believed there would come a time when we would customize the part of the web we needed and keep it secure in our own pocket. These brilliant innovators had a solution, except it was 25 years before we knew there was a problem.

Well, as they say on Broadway, everything old is new again.

Recently, the Federal Communications Commission decided to eliminate most of the net neutrality regulations that required broadband providers to inform customers about how they manage their networks. The commission is now led by Ajit Pai, the former legal counsel for Verizon. Apparently, this appointment isn’t seen as a conflict of interest.

The upside of this decision is that it may provide economic incentives for investing in innovations that improve network connectivity and speed. The downside is that it will cede control of who has access to the net, and at what price, to the largest broadband carriers.

While government officials and public advocacy groups are waging a war of words in the media, little attention is being paid to the opportunity this creates for more disruptive technology companies like that little Israeli startup from the 1990s.

In President Trump’s first address to a joint session of Congress, he repeated his campaign pledge to spend $1 trillion revitalizing the nation’s infrastructure. But infrastructure is more than just roads, bridges, and airports. It’s also digital.

Over the past 50 years, taxpayers have invested billions in the development of the internet. That makes us majority shareholders. Why should the rights of the telecom shareholders be well represented with these changes to net neutrality, and not ours? It’s hard to imagine anyone investing in a company without some form of control or transparency. But that’s exactly what our government is now demanding that we do.

The convergence of delivery options such as cable internet, DSL, 4G wireless and satellite drives today’s competition. Add to this mix upstarts with radical new technologies, low-cost providers from other regions, and fluid pay-as-you-go business models, and the market looks very different than today’s oligarchy of sluggish behemoths.

But is the net really being deregulated? Are the barriers of entry really being lowered to encourage true free market competition, or are these simply different rules to protect the interests of a few incumbents? Look at who receives the best government contracts. They are not the most innovative companies. Instead, they are the largest. The fix is in.

If you’ve visited Delhi or Seoul lately, you probably noticed how much better their service is than here at home. These cities see their investment in digital infrastructure as an engine of economic growth. The number of high tech start-ups growing to over a billion dollars is also following this trend. They are now creating larger numbers of tech jobs faster than we are in the U.S.

Given that we can’t even get sufficient funding for passable roads and drinkable water, what hope is there that our government will adequately support the development of a superior digital domain? The irony is that smaller organizations are far more likely to introduce breakthrough innovations than their larger rivals because they lack the resources to compete on scope or scale. Ingenuity is all they have. They are the seedlings that grow into larger job producing companies.

When the next breakthrough communications technology emerges, we can only hope that people like George Soros allow us to invest in it. That way, we have a reasonable chance of being treated like shareholders, and getting some real return on our investment.

Jeff DeGraff is the Dean of Innovation: professor, author, speaker and advisor to hundreds of the top organizations in the world. Connect with Jeff on Twitter @JeffDeGraff.

This article was originally published on The Next Idea

Last Lecture

Jeff gave a lecture discussing the most creative endeavor you’re going to have in life.

Watch the lecture Here. 

How To Be Awesome At Your Job Podcast

145: Encouraging Innovation Through Conflict with Jeff DeGraff

Professor Jeff DeGraff shows how to stir up some constructive conflict to encourage innovative thinking in the workplace.

You’ll Learn:

The extraordinary value of arguing
Who are the four types of people at the workplace and what creative tensions emerge among them
Effective ways to create constructive conflict at work

About Jeff

Jeff DeGraff is called the Dean of Innovation because of his influence on the field. Dr. DeGraff is a professor at the Ross School of Business, University of Michigan. He has advised hundreds of the world’s most prominent firms. He has founded a leading innovation institute, Innovatrium, with labs in Ann Arbor and Atlanta. Jeff’s thoughts on innovation are covered by Fortune, Wired and the Harvard Business Review to name a few. Jeff writes a column for Inc. magazine and has a regular segment on public radio called TheNext Idea. He is the author of several books.

Listen to the podcast Here

 

Items Mentioned in this Show:

Jeff’s Website and MOOC: JeffDeGraff.com
Book: The Innovation Code: The Creative Power of Constructive Conflict by Jeff DeGraff
Book: Art and Visual Perception by Rudolf Arnheim
Book: The Power of Meaning: Crafting a Life that Matters by Emily Esfahani Smith
Company: The Innovatrium

jumbleThink Podcast

In this episode I talk to Jeff DeGraff.  He is a professor at Ross School of Business at University of Michigan, a respected author, active blogger, sought after speaker, and consultant to leading corporations.   In this episode we talk about a wide range of topics surrounding innovation.  His insight will inspire you to take the leap and begin to create your ideas.

Listen to the jumbleThink podcast with Michael Woodward Here

Currency innovations like bitcoin could render bank deregulation moot

A few years before the Great Recession, I was an advisor to the Federal Reserve Bank. I provided some limited advice on how to stimulate growth through innovation. It was too little, too late. Many financial experts far more capable than myself tried to help prevent the imminent collapse. But the politicians were sure they knew more about our economic system than the experts. Hindsight proves they knew very little and it was the everyday American who suffered from their ignorance and arrogance.

So here we are again. Less than a decade away from our brush with economic Armageddon, we are deregulating the financial industry. We don’t need the Dodd-Frank Wall Street Reform and Consumer Protection Act because the same financial institutions that were too big to fail (but required trillions of dollars to bail out) will apparently regulate and police themselves. It’s like returning to the honor system when half of the class was caught cheating and still failed the exam.

On top of that, the big investment banks have now invented something called spread networks. Author Michael Lewis brought these to light via his bestseller, Flash Boys. Basically, these networks give big banks an advantage by executing trades faster than everyone else, allowing them to buy lower and sell higher than the average Joe. While these spread networks game the system that the banks themselves created, the bigger problem is that they trip trading algorithms in other financial institutions. Forget irrational exuberance – this is artificial exuberance. These systems are not responding to market dynamics. They are creating them.

Ironically, investment banking itself was created from the outside-in. In the eighteenth century, inherited property was the only pathway to wealth. Mayer Amschel Rothschild, a Jew from Frankfurt, helped create many of the financial innovations we still recognize today: global banking, bond markets, foreign exchange and arbitrage. Rothschild, who endured pogroms and daily doses of anti-Semitism, developed imaginative ways to infiltrate a system designed to keep people like him out. Today, the biggest innovations in finance are largely happening outside of the financial community, as well. Digital cryptocurrencies, like Bitcoin, are emerging as viable financial alternatives. They’re basically managed via a continuously growing distributed database called a block chain. All users have a record of all transactions all the time, which means no hidden fees, accounting errors or hacked accounts. In other words: No bank needed.

Innovations like Bitcoin can disrupt more than just financial institutions. They can move independently of borders and the laws that govern nations. They can be used for illicit purposes without detection. Most importantly, since the government has no line of sight, collecting tax on these transactions is almost impossible.

Increasingly, digital innovations are being used to bypass ATM fees, deflect overage charges, and switch credit card debt to lower cost alternatives. They provide lending networks that are an affordable substitute to predatory payday loans, as well as algorithms that predict the credit worthiness of people with no credit history. And these are just the beginning. In the near future, artificial intelligence software, along with open and pervasive internet access, will make it easier to disintermediate the big banks. The ability to connect lenders with borrowers, manage complex corporate transactions like mergers, and invest capital productively will no longer be the monopoly of the banks.

While our largest financial institutions are lobbying to recover the freedoms they enjoyed before they destroyed the economy a decade ago, entrepreneurs are innovating their way around them, creating a financial future that will make banks more and more irrelevant. Which makes one wonder if someday, we’ll hear the phrase “Too Slow to Fail.”

Jeff DeGraff is the Dean of Innovation: professor, author, speaker and advisor to hundreds of the top organizations in the world. Connect with Jeff on Twitter @JeffDeGraff.

This article was originally published on The Next Idea

Maybe we should build a wall to keep our talented people in

A recent headline in the Financial Times read, “Vancouver seizes chance to lure Silicon Valley tech talent.” The mayor of Vancouver confirms that inquiries from U.S. tech companies have risen sharply in recent months.

It’s no secret that Cisco Systems, Samsung and SAP have recently established a presence north of the border, but now it appears that Apple, Microsoft, Google and Facebook are all also considering their options. If this tire-kicking becomes a trend, it will compromise America’s ability to remain a global leader in technology.

According to a study in a recent California Management Review, the re-urbanization of America and other parts of the world is leading the collaborative innovation revolution. The demographics of these cities are very different than those of their surrounding areas. Austin, Madison, Raleigh Durham and Ann Arbor come to mind. These cities are also job-creating juggernauts that build a strong tax base and attract service businesses and more start-ups. They are innovation ecosystems that are vital to sustaining a high standard of living in a competitive world. What do these cities have in common? They are highly diverse.

Diversity is an essential element of an innovation ecosystem, because it brings a wide range of mindsets and talents into close proximity. The constructive conflict produces solutions to intractable challenges and creates irresistible opportunities. These people are deviating from the norm on purpose. The greater the variance, the greater the potential value.

In Eric Weiner’s bestseller, The Geography of Genius, he makes the case that most of what we would now call intellectual property has historically come from a relatively small group of people who are in the same right place at the same right time – think Athens in the Classical period, the Florentine Renaissance, Detroit in 1900 or Silicon Valley in 2000. In most cases, these places were anomalies that were eventually forced to conform to the norms of the larger homogenous area. Predictably, the loss of these communities was also a portent of the rapid decline of civilizations that traded their future for the past.

Today’s innovation ecosystems can be anywhere on the planet. But it’s interesting to note that over half of all the high quality patents have come from innovators born outside of the U.S. or from first generation Americans. Some survey data even suggests that immigrants are five times as likely as native-born U.S. citizens to produce a patentable innovation. We see similar trends for start-up businesses. This human capital brings innovation into our country from all corners of the world.  But it can just as easily go somewhere else, and the rift between the current administration and Silicon Valley makes that more and more likely.

In fact, it’s already happening. Research universities, the innovation engines for the U.S. economy, are facing increasing visa hurdles for students, postdoctoral fellows, and researchers. This is particularly ominous because these people are our next generation innovators.

There are innovation ecosystems in cities all around the world: Bangalore, Cambridge, Santiago and Tel Aviv – and let’s not forget Toronto, Montreal and Vancouver. Maybe we should consider building a wall between the U.S. and Canada to keep our best and brightest at home. Then again, such a wall would just likely be a colossal waste of money because these bright folks would just find a new way under, around and through it.

Jeff DeGraff is the Dean of Innovation: professor, author, speaker and advisor to hundreds of the top organizations in the world. Connect with Jeff on Twitter @JeffDeGraff.

This article was originally published on The Next Idea

Employment for all Americans is ideal. Protectionist trade policies are not the way to do it.

You may have missed it, but last summer Walmart got into some hot water with the Federal Trade Commission for its”Made in the U.S.A.” campaign. According the FTC, for a company to make that claim, all of a product’s components must be manufactured and assembled in the United States.

In a globally integrated supply chain, how do you determine if something is “made” in a country?

For starters, over half the world’s steel production is in China. The U.S. produces less than 5%. So chances are, anything made with steel, the major component in heavy manufacturing, already fails the “Made in the U.S.A.” test.

To get around this, many companies now use the term “sourced” to mean products made, assembled or grown in the USA. This is a clever marketing ploy because it tells us very little about where the jobs are being created, the real reason we value “Made in the U.S.A.”

That brings us to the impending shift in U.S. policy better known as “America First.”

When we talk about global trade, countries with well-documented protectionist practices like China, Russia and Japan come to mind. However, according to Global Trade Alert, an independent branch of the Centre for Economic Policy Research that monitors policies that affect world trade, the country with by far the most restrictive tariff and non-tariff barriers is the United States. In other words, American has been first for decades.

China is the world’s second largest economy. Its rise has largely been due to the massive low-wage workforce that produces about 10% of all manufactured goods in the world. This has made it a cornerstone of the global supply chain. The U.S. now only produces about 5% of the all the vehicles in the world. According the American-Made Index, the number of cars built with 75% domestic parts from the U.S. and Canada has plummeted to only seven in 2015. This makes it highly impractical, if not impossible, to extricate U.S. manufacturing from other countries and trading blocs.

This takes us to the heart of the matter. To bring manufacturing jobs back to America would likely require one of three scenarios:

We pay significantly higher prices for the same goods we now buy. This would most adversely affect the poorest among us, such as those on fixed incomes. And the automotive industry, a key employer in our state, would be one of the hardest-hit.
We coerce our workforce to work for wages comparable to those in developing countries. This approach increases the number of working poor in America.
We automate and eliminate these jobs. Where plants once had hundreds of workers, there are now only a handful of highly skilled robotics operators.

Yes, we would like to find employment and advancement opportunities for all Americans. But, ironically, these proposed protectionist trade policies will leave us isolated from the high-growth markets and opportunities required to actually put America first. Let’s stay in the global markets we have established over the past century and double down on our innovation capabilities. Doing it that way, we could lead world into the 21st century and put America first the American way.

Jeff DeGraff is the Dean of Innovation: professor, author, speaker and advisor to hundreds of the top organizations in the world. Connect with Jeff on Twitter @JeffDeGraff.

This article was originally published on The Next Idea